Defending individual liberty against the tyranny of government.
Truth, justice and the American way: liberty without compromise.

Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life,liberty, and property existed beforehand that caused men to make laws in the first place. - Frédéric Bastiat

Perry Eidelbus,Der Eidelblogger

Westchester,New York

Wednesday, May 31, 2006

Mohamed ElBaradei, the world's biggest idiot

Calling this "Neville Chamberlain Syndrome" can't begin to approach his level of stupidity.

MONTEREY, California (Reuters) - Iran does not pose an immediate nuclear threat and the world must act cautiously to avoid repeating mistakes made with Iraq and North Korea, the head of the U.N, nuclear watchdog agency said on Tuesday.

Mohamed ElBaradei, director of the International Atomic Energy Agency, said the world shouldn't "jump the gun" with erroneous information as he said the U.S.-led coalition did in Iraq in 2003, nor should it push the country into retaliation as international sanctions did in North Korea.

"Our assessment is that there is no immediate threat," the winner of the 2005 Nobel Peace Prize told a forum organized by the Monterey Institute of International Studies south of San Francisco. "We still have lots of time to investigate."

"You look around in the Middle East right now and it's a total mess," he said. "You can not add oil to that fire."

The recent violent history in Iraq bears an important lesson for diplomacy with neighboring Iran, the diplomat said. "We should not jump the gun. We should be very careful about assessing the information available to us," he said.

The Bush administration led a coalition into Iraq in 2003 saying President Saddam Hussein was developing weapons of mass destruction. No such weapons were found.

"I ask myself every day if that's the way we want to go in getting rid of every single dictator," ElBaradei said.

While it was unclear whether Iran ultimately intended to redirect its development of nuclear power into a weapons system, it was clear there was no danger of that right now, he said.

The five U.N. Security Council permanent powers and Germany, trying to curb Tehran's nuclear program, are planning to meet in Vienna on Thursday to try to finalize a package of incentives for Iran to halt uranium enrichment along with penalties if it keeps defying international pressure.

ElBaradei said he believed a majority in the Iranian leadership was still interested in a negotiated solution and normal relations with the world. The United States is pressing for tough U.N. sanctions if Iran does not comply.

"It would be terrible" to try to strengthen sanctions, which could force Iran to retaliate, he said.

"We have learned some lessons from North Korea," he said. "When you push a country into a corner, you are giving the driver's seat to the hard-liners there."

Mohamed, what grade is that hashish you're smoking?

Iran would be ruled by "hard-liners" regardless. Iran is as trustworthy with "we only want nuclear energy" as Hitler was trustworthy enough not to push past the Sudentenland. Iran wants "negotiated solutions" in the same way Hitler conned Chamberlain at Munich. Iran will "retaliate" against sanctions in the same way that North Korea, which developed its nuclear weapon technology in spite of ElBaradei and his circus, was working toward nukes in spite of promising Bill Clinton otherwise. Are Mohamed & Co. really this naïve? Iran will press for its own nuclear weapons if sanctions are imposed, and if sanctions are not or if they are later lifted, Iran will continue to develop nuclear weapons anyway. And it is Iran who is adding oil to the Middle East fire, whether in its long-term pursuit of destructive nuclear technology, its state support of terrorists, or its support of insurgents in Iraq.

Iran is not an immediate threat, but it will be. Estimates of a nuclear-armed Iran have ranged from five to ten years, and judging by Iran's rush work on developing missile technology, I fear that five years is optimistic. As our friend McQ of QandO said of a 10-15 year estimate, "My assumption is this information is being provided by the same agencies that said Iraq had WMDs and that India was years away from a nuclear weapon and Pakistan hadn't a clue."

The WMD issue is still open, however. None have been found...yet. There's still former Iraqi general Sada, who said that the Iraqi army transported WMD materials to Syria using stripped-down commercial aircraft. This fits with all the "convoys to Syria" rumors just before our invasion. Charles Lewis wrote a lengthy piece that mentioned Prada and other sources, essentially asking, "We've come so close to bringing the stuff to daylight, so why is the Bush administration stalling and suppressing?" Others criticize the Bush administration's "handling" of the war, and I do agree, but for a different reason than virtually anyone: Bush and his staff could hit home runs in the realm of public support, but they're so lackadaisical, as if they trust mainstream media to cover certain things.

Toppling Saddam is not what we ought to do to "any dictator," just to those whose regimes represent a clear threat to the United States people. Saddam Hussein, for example, who may not have had direct involvement with 9/11 but undeniably harbored and supported terrorists, including al Qaeda. Considering that Iran has called the United States "the Great Satan" since 1979, kidnapped American citizens, and financially and otherwise supported terrorists who have killed innocent civilians of many nationalities, we may have no choice but to add it to the list, and very soon. Iran cannot be trusted, period, with any nuclear technology.

Thursday, May 25, 2006

Do these new college grads think they're in France?

ONLY about a week ago, Washington Square Park was littered with giddy NYU graduates giving each other high-fives, brandishing diplomas and jumping into the fountain.

So what's become of this lot?

At this moment, an inordinate number of them can be found sitting on their parents' couches watching "Tyra," eating Cheetos - and drying their tears.

"I've been crying every day," says [name redacted at her request], a 22-year-old who just graduated from NYU's Tisch School of the Arts.

"It's just been really intense, between graduating college and trying to find a job. I just want to be happy and find something I can enjoy doing!"

Unfortunately, that's easier said than done.

In the last month, Murphy has sent out 30 resumes. The only response she received was from "Cruella DeVil's mean sister" - a publicist who told her she needed to do more research about the field before deigning to apply for a p.r. job.

"When I hung up the phone, I looked down, and I'd broken out into hives."

Do you hear it? Do you?

WAAAAAAAAAAAAAAH!

Could anyone feel less for her than I do? By sending out a mere 30 resumes a month (one a day), she thinks she can find a job she'll enjoy doing, with the implicit requirement that it pay enough and be strictly 9 to 5. She's fortunate that someone replied, "Look, you don't know anything about the industry. Good grades and showing energy aren't enough. Do your homework if you expect to impress someone enough to land a job." That person did her a favor.

Note that the reporter used "deigning," which many people tend to misuse. The word involves condescension. However, if that's the attitude the recent grad shows, that she's "deigning" to apply for those jobs, then it's no wonder only one out of 30 bothered to reply.

Welcome to the real world, kids. This is the United States of America, not France. In this country, you're not just expected to work hard, but with smarts and resourcefulness. Above all, you will learn humility, especially when you realize you won't get paid what you think you're worth. It's called supply and demand: you're not as indispensable as you think you are, and even if you're really good, odds are that you are not the company's only option.

As part of this post, I wrote about Americans having very high opportunity costs, so high that they won't take any job they can. They don't need to. In one way that's very good, because it indicates our wealth (in this case, the wealth of the graduates' parents, and their willingness to let them continue living at home). In another way that's deplorable, because so many young Americans are spoiled. They graduate from good schools with lots of book smarts, but nobody ever told them how to get a job: how to apply for every possibility advertised in the newspapers, the usefulness of headhunter agencies, how to interview, even how to write a resume. Worse, recent grads think that they can land a good job right away.

When my father graduated from high school in 1936, he went to work. He was fortunate and found a job in a mailroom, which was cleaner and less physically demanding than alternatives. After serving five years in the Army during World War II, he went to Bentley for a couple of years, got a certificate, then returned to Schenectady and got a traveling auditor position with General Electric. But the important thing is that when he finished high school, he was willing to take any job he could. More than once in my life, I've been guilty of laziness, or as I justified it, "waiting for the right job so I don't waste time elsewhere."

I got bored and dropped out of college after a couple of years. After working for five years and gaining real world experience, I went back to finish my degree. Though I learned a lot of painful lessons, they still had less pain than had I graduated in four or five years with no idea what the real world is like. I've had good and bad jobs, and right now I consider myself really God-blessed to be in the best job I've ever had. Today was a little rough, since I had to work through lunch and then very late. A massive project came up this morning, and it had to be done by the time I left, so my regular 9 to 5 wasn't possible today. But hey, that goes with the territory.

Being economically ignorant, liberals usually miss the point

To start, Microsoft is not a monopoly. Hasn't this guy ever heard of Macs and Linux? Case closed.

If there are no barriers to market entry, then a company is merely dominant, not a monopoly. But what constitutes a barrier? Well, merely being competitive is not a barrier. It's the would-be entrants' fault for not being as competitive. A true barrier, and hence a true monopoly, exists only through the power of government -- which Microsoft clearly does not have.

If you think something is "overpriced," then don't buy it. Clearly Microsoft software is valuable to a lot of people, because they're willing to pay hundreds of dollars per Windows or Office license. Developing an operating system is very costly, and not many companies bother, so guess what: we're back to supply and demand. Microsoft "manipulates" the price as much as my local grocery store "manipulates" the price of bananas. If I think the price is too high, I won't buy it. If I think the price is too low, I'll buy more. It's up to the company to determine at what price it maximizes sales revenue.

But like I said last night, it's just like liberals to tell others how to live their lives. Instead of trying to persuade you, they want to use the power of government (i.e. courts and the FTC) to prevent you from buying peacefully and voluntarily from the company of your choice. Instead of offering rational thought, they spew invectives about "overpriced" and "evil capitalists" that are contrary to economic truth.

The guy doesn't even understand computer software. Large games typically are that way because of all the graphics files, not necessarily because of code. Second, nobody would pay $500 for a game because you don't always run the game; you pay $50 because you expect it to give you at least several hours of entertainment. You do, however, need to run an operating system all the time, which increases demand. An operating system is also far more complex than any silly game. It needs to have the flexibility to run just about anything thrown at it, from hardware to software, whereas a game need only know enough to partner with the operating system. It's been years since programmers had to write software to suit a machine, not require people to have a machine that suited the software.

"I bet you're the same person who would defend rising oil prices as and mindblowing profit margins of oil companies on rising oil prices of suppliers." I'll forgive his circular babbling to get to the point. I don't have to defend rising oil prices as a result of...rising oil prices. All right, maybe I won't forgive that, because it's among the stupidest phrasings I've ever heard.

I think he meant rising oil prices as a result of oil being more expensive to produce (i.e. pump, transport, refine and transport again). But I don't. Oil prices go up in accordance with simple supply and demand, which I don't have to defend, because it is economic fact.

I do want to comment on a couple of things in "ANWR Fact and Fiction."

...no good American wants to "ruin" any amount of our land, even if it is a largely uninhabited, frozen desert.

Actually, I consider myself a good American and a good capitalist. I see nothing wrong with "ruining" a certain amount of land, if that means sufficient benefit. That's why we dump garbage in certain places, rendering any adjacent land quite unsuitable for residential use. Similarly, if drilling in ANWR meant that the land would be unusable for any purpose once the oil is drained, I'd say that's worth 30 years of 1.5 million barrels a day.

In reality, ANWR has the potential to supply America with an additional 1.5 million barrels per day for 30 years – that's equivalent to 30 years worth of Saudi imports.

No amount of supply, though, from ANWR or any other domestic source, would reduce our Saudi oil imports to zero unless Congress enacted legislation to forbid it. We would import less, but never zero: oil is a fungible commodity, so each type of crude will sell for the same price on the global market whether it came from Alaska or the Middle East. And even if we passed import restrictions so we bought no more Saudi oil, Saudi Arabia would just sell to other countries, albeit at lower prices because of the increased supply.

So increasing our own domestic output won't mean energy independence, not without government intervention, nor will it ever significantly deprive Middle East nations of money that sometimes is funneled to terrorists. It will, though, mean cheaper oil prices, and that's all the reason we need to start drilling.

The intellectual bankruptcy of the left, part III

Part II was subtitled "Brad DeLong and the art of the stupidly flawed analogy." This entry is slightly more succinctly subtitled: "Brad DeLong's continued intellectual bankruptcy."

As I've explained, ever since my blogfather Don Luskin got DeLong in trouble with the University of California Regents (for intellectual property violations), DeLong's had it in for Don. Since he can't actually attack Don on anything of substance (let alone anything involving intellect), DeLong invariably resorts to no more than pure ad hominem. I don't know about any of you readers' specific experiences, but throwing around "stupidest man alive" is something most of us got over during elementary school.

If you go to the 2006 Economic Report of the President, issued by George W. Bush and his administration, and look at page 375, Table B-78: "Federal receipts, outlays, surplus or deficit, and debt, fiscal years, 1940–2007 [Billions of dollars; fiscal years]", you will find that George W. Bush reports a federal government surplus of $236.2 billion for fiscal year 2000.

Maybe this is a subtle way of making the claim that George W. Bush is a man of the left? Naah. They're not that smart.

Bush is not infallible. I'm among the first to criticize him, in fact, when he warrants criticism. (Sadly it's getting too often, but that's for another day.) So if GWB's staff -- not him, not Cheney, but his staff -- puts out the annual EROTP, don't take it as gospel when it simply repeats the same historical data from the Congressional Budget Office.

Second, since the EROTP uses the same data columns, it shouldn't be hard to see what I explained before, that the so-called "budget surpluses" were only because of Social Security revenues. You just have to know how to read simple tables, which I wouldn't have thought is beyond the ability of Berkeley economics professors. What's so hard about this? You have to look at the "On Budget" column, not "Total," because Social Security revenues spent now are obligations we must repay in the future. DeLong's $200 billion deficits just don't exist, no matter how much he insists.

My income does not increase just because I got a home equity loan or spent a lot using credit cards. Let's put it another way, that I plan to deposit 93.8% of my earnings into my checking account, and the other 6.2% into a savings account. However, I regularly spend 96% of my paycheck, so I "borrow" from the savings account. Since I will depend on those savings at some undefined future point, I made a promise to myself to repay the funds. Only an accountant worthy of Enron, or a Berkeley economics professor, would be ignorant enough to claim I have any income "surplus."

Oh, I did err in one way, because I forgot to factor in the Post Office's deficits and surpluses. However, those are only a couple billion dollars, and they tend to vary around zero anyway. They're insignificant compared to the main point that the $200 billion deficits were no more real than the Social Security trust fund.

I don't know who's stupider, DeLong or his lackeys. I wouldn't necessary call Beck "right-wing," but anytime a liberal can't refute you, that's what he'll reflexively accuse you of being. As far as mine being another "right-wing" blog, if any of them could actually read, they'd see in "My recommended entries" that I bash conservatives as well as liberals.

So Beck doesn't allow comments on his blog. And? It's his own intellectual property. If he doesn't want to deal with comments for whatever reason, that's his business. It's just like liberals to act like they know best for your lives, telling you what you ought to do. And it's just like the quintessential liberal hypocrite that DeLong's bootlickers criticize someone for not allowing comments, when DeLong himself deletes comments he doesn't like. (In other words, comments he and his readers can't gang up on.)

Another of DeLong's commenters said:

Lots of times they just don't know. We see talking points, they see straight reporting from "Fair and Balanced" news sources. Would Rush and Sean lie?

I have been slogging in the Social Security trenches for a number of years now and it is astonishing what people "know" about its financing in large part because that is all anyone has ever told them all their adult lives.

And funny that projected $1.5 trillion dollar surplus was real enough when Bush was using it deliver promised tax cuts, military spending and paydowns on the budget.

First, I don't get my Social Security information from right-wing talk radio or Fox News. I don't even listen to any talk radio these days, except for rare occasions like last week. I do, though, get my Social Security information straight from the horse's mouth, like the Social Security Administration and its annual report. Even the CBO's budget data clearly shows Social Security revenues, so I don't need Limbaugh or Hannity to tell me what's going on. Want to know the situation? Read my thorough take.

Second, any reference to these trillion-dollar surpluses were the CBO's projections over ten years, not for a single year. The CBO also made overly optimistic assumptions of continued economic growth and tax revenues; 2001's recession (as mild as it was) and terrorist attacks made the forecasts outdated. Also, Congressional Republicans increased spending by more than Bush's tax cuts (which I explained here), so we would have a greatly improved budget today if the GOP would exercise some fiscal restraint.

DeLong's next idiot commenter:

From the lies, distortions, and downright lunacy on display, couple with shameless arrogance in ignorance, isn't EVERY day April Fool's at Eidelblog?

Plus, it would never have occurred to me that Luskin might have a an actual acolyte. And this one claims to be invited to cocktail parties. Miraculous.

Instead of trying to refute what I said, which he clearly cannot, all he can do is resort to ad hominem. And stupidity, too, because his usage of "April Fool's" implies being foolish, whereas the rest of us know that it involves playing jokes on others. Hence every day is clearly not April Fool's on my blog.

You really have to forgive this one, for he has a reading comprehension problem. I actually had written, "Well, that's what DeLong gets for acting like the rude schmuck you tend to encounter at cocktail parties, the kind who uninvitedly jumps into the middle of your conversation." I attend parties of all kinds, and as I said, every once in a while you run into a rude schmuck who jumps into the middle of things.

Next moron:

Give him a break, he's an autodidact, playing educational catchup by slogging through Will & Ariel Durant. That's admirable. If he were to take his culture straight, through, say, the Hutchins-Adler great books, then there's hope for him. But he's got to turn off the radio or he'll die an imbecile.

I've never bothered to read anything by either of the Durants. I don't have such time to waste, nor on what Robert Maynard and Mortimer deign to tell me what are "great books." I'm perfectly capable of deciding that for myself, thank you. Again, isn't it just like a liberal to tell you what to believe, disguising it by telling you what's a good source on what to believe?

All this putz can do is claim I'm "playing educational catchup" without refuting a single thing I said, and I with a mere B.A. am proving Brad DeLong "Ph.D." doesn't know what he's talking about. What, then, is the value of advanced education, especially to liberals who cheapen it?

I guess those fellas are just too busy palpitating Horse shit to read "The Economic Report of the President." Perry, never use a metaphor without calling a visual image to your mind, and, by the way, if the image is one of fondling equine excrement, please do not share it with me.

Guess I should be glad he didn't call the 2006 Economic Report of the President palpable Bullshit. That is a really disgusting metaphor.

Also "what"'s missing from Perry's third to last sentence. (note not ?, .).

How's this for a metaphor. Remember the Saturday Night Live "Bu'wheat Sings" skit with Eddie Murphy? At one point, he sang so incomprehensibly that a bunch of question marks appeared at the bottom of the screen instead of the song title. Well, I bring that up because I have no idea why this guy thinks "what" is missing from my entry's third-to-last sentence.

I tend to blog late at night, and often I leave the computer for a bit to take care of something. So occasionally you'll see me drop a word as I tried to type as fast as possible, but I see nothing wrong with this:

Finally, and it's somewhat unrelated, DeLong said "what we do to our lecturers is shameful."

Oh, so that's why, Speaker Hastert?

I called it. I called it exactly. Reuters reported tonight that Hastert himself is under investigation by the FBI, after some convicted lobbyists are pointing the finger at him. If the Supreme Court stopped the searches, that could hinder the FBI from obtaining necessary evidence from Hastert's offices. So it's no surprise that Hastert came to Jefferson's defense, and not just because both parties will watch each other's back in their mutual corruption.

Congratulations, Taylor Hicks!

I must say, today has been among the best I've ever known. It was just so happy, energetic and even musical -- the kind of day where you hear Sinatra in the air, and you walk to the beat of "I've Got You Under My Skin" while snapping your fingers. Even work, with a database ready to blow up in our faces, couldn't faze me.

My day is now complete. All right, I did say I'd never watch American Idol again, but I decided to watch tonight's finale. It surprised me to hear so many good singers (especially Mandisa) who were better than Ace, Kellie and Katherine, maybe even Elliot, but were voted off before I started watching.

It was a treat to see Burt Bacharach and Dionne Warwick. Burt is getting along in years, but it hasn't diminished his piano playing. Dionne was clearly getting old. Her voice has aged but is still pretty good, considering, except that she was weak on the high notes.

Prince was boring; no more need be said.

Taylor was my favorite from the start, because I enjoyed his style so much. The guy just gets out there to perform and have a good time, and he exudes the attitude that if he wins, it's a bonus, not the goal. However, after the first few shows I saw (starting with Rod Stewart), I favored Chris to win. When Chris was stupidly voted off in favor of Katherine, I expected Elliott to pull it off.

I'm pleased with the results. Maybe it was like 2004, that a lot of Chris' "Soul Patrol" felt they had to "get out the vote" so the lesser competitor wouldn't win.

Above the law?

Congressman William Jefferson, D-LA, could be indicted by a grand jury in as soon as a month, and the initial evidence of bribery and corruption looks very, very bad. The FBI searched his office Saturday evening, starting around 7:30, but only because Jefferson repeatedly refused to turn over documents under subpoena.

The warrant was properly obtained from a federal judge: it was supported by oath or affirmation, and based on persuasive information. Now, Jefferson has not been charged yet, let alone convicted. If anything, considering the immense probable cause behind the warrant, he should welcome the search to clear his name. I'm in no wise saying that people should meekly submit to searches, but there was considerable evidence here that elicits very good questions. So why are so many accusing the FBI of conducting an unconstitutional search?

Well, Jefferson's defenders, including Republicans, claim that the search violates the Constitution's "separation of powers." A Google News search of that phrase returns innumerable articles written by ignorant reporters, who fell for some prominent lawmakers' hogwash. Nowhere in the Constitution does the phrase "separation of powers" appear. The principle itself appears only in that Articles I, II and III clearly delineate powers between the three branches. Even so, the separation of powers is only that, a division of governmental authority between the three branches, with "checks and balances" so that one branch can keep the others in line. But separation of powers does not give the legislative branch immunity from the executive branch's power to enforce the law.

Some specifically point to the "Speech and Debate" clause, but here's what Article I, Section 6 says:

The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.

Is it no longer a federal felony for a public official to receive bribes? So this clause does not apply.

Furthermore, precedent is not on Jefferson's side. The U.S. Supreme Court decided in United States v. Brewster (1972) that bribery is not an act for which a member of Congress can claim immunity while Congress is in session. One of the things the Court held was:

2. The prosecution of appellee is not prohibited by the Speech or Debate Clause. Although that provision protects Members of Congress from inquiry into legislative acts or the motivation for performance of such acts, United States v. Johnson, 383 U.S. 169, 185, it does not protect all conduct relating to the legislative process. Since in this case prosecution of the bribery charges does not necessitate inquiry into legislative acts or motivation, the District Court erred in holding that the Speech or Debate Clause required dismissal of the indictment. Pp. 507-529.

Most fundamentally, if the executive branch cannot search a legislator's offices, despite having a valid warrant based on reasonable suspicion, then the legislative branch has set itself above the law. What do Jefferson, Hastert and the rest think the executive is supposed to do, continue "pretty please" requests?

Tuesday, May 23, 2006

Giving the French a run for their euros

It really takes a lot to compete with the French in bad economic policy, but the Finns are going for the gold in a different way. Some of them want their countrymen to have the distinction of the best attitude about bad economic policy, by learning to love high taxes.

The main Taxpayers' Association of Finland, with 190,000 members, focuses on lobbying for tax cuts.

You can't make this stuff up.

In other news, this news article is headlined "Finland's Unemployment Rate Falls in April" with "Finland's Unemployment Rate Falls to 8.6 Percent in April" as the subtitle. But the article makes that claim based on a comparison of April 2006 to April 2005. Finland's unemployment was 8.1% in March 2006, so in fact it went up in April. Talk about putting spin on bad news!

"Marginalizing" a true moron

Calling someone a socialist, particularly when you're too boneheaded to realize what constitutes a true "socialist," is hardly civil discourse. I'm not about to let some half-brained jerk turn my blog into a pissing contest, thank you very much. It's not good for the ratings daily readership, and more importantly, that's not why I started my blog. My time is limited enough that I don't instigate flamewars, but I will end them.

He insists that I did read his e-mail, though I said I didn't. Well, I really didn't. I saw the first few words in my GMail inbox, decided I really didn't care what he had to say, deleted his message, then sent him the following as a new message:

Subject: I deleted your message without reading

I'm really not in the mood for arguing, all right? Especially with someone who improperly uses "socialist." to label those with whom he disagrees.

Thanks.

That's as polite and sociable as I could make it. No vitriol, just an implied "Can you shut up now?" I'm really not in the mood for arguing, all right?

Reading through his post, I was rather disappointed that his wife's only heckle was accusing me of having a "man crush" on Chris? Sorry to burst her bubble, but even though I said Taylor is my favorite, I'm still quite straight, thanks. I can, however, recognize a great musical talent. For a few minutes I toyed with the idea of writing a little "Good luck in your career" card for my mother to send Chris; she likes him a lot.

Good heavens, what kind of delusions does this guy's wife have? Maybe she also thinks Katherine can actually sing...

Well, it's time to take his e-mail, the one I really didn't read, apart. I suppose my response would have been less harsh had I read his e-mail, or had he simply dropped the matter and stopped wasting my time:

First of all, I do use the term "socialist" quite liberally. For instance, I have complained that the illegal defense rule in the NBA is a socialist attempt at regulating play.

Bullshit. The NBA is a private organization. So strictly speaking, the players agree to the rules voluntarily, which is not socialism. This applies to the illegal defense rule, entering the stands (even to defend your wife), or a strict dress code off the court. If a team's owners didn't like that the illegal defense rule was replaced with a 3-second one, they could have left the NBA to form their own league.

Socialism is the forcible redistribution of wealth. Even in certain leagues where more profitable teams have their money transferred to less successful teams, that is still not socialism. Those teams are perfectly free to leave and form their own association. In true socialism, there is no such option.

I don't think you can equate excessive use of "socialist" with with excessive use of "Nazi" for the simple fact that we don't really have Nazi's ruining our country but we certainly have socialists throughout the power structure of the country. I am sure we agree on that!

Actually there are many fascist (i.e. Nazi) elements to our present government, from the Patriot Act to the NSA's long-time infiltration of people's private, lawful communications. These are not mutually exclusive with the socialist elements, such as a gargantuan welfare state.

Anyway, I started off by calling you a socialist, as a joke. Anyone who looks at your blog for a millisecond knows that you are capitalism incarnate. Furthermore, even from the paucity of comments I have posted, you should have an inkling that I generally don't act like "a horse's ass" and have a pretty good understanding of economics and its terms.

Sarcasm doesn't transmit well over the internet. Yeah, I could have characterized you as a "whiner" or even a "sophist" because at root, I found your reasoning uncompelling. I even could have appended "sarcasm" parenthetically as I have done often times.

It was a ridiculous thing for him to call me, yet he pursued it in a second comment without such an explanation.

You know, people, the only thing I ask for is civil discourse. It doesn't even have to be intelligent, because otherwise, well, I'd have to delete every liberal's comment.

Sure it's a stretch to liken anyone who complains about outcomes to a socialist, but it's no more a stretch than using a popularity contest decided by the multiple votes of 9 year old girls as a vehicle to illustrate the failings of democracy.

It's all theoretical. It's all good. And it's all innocuous.

Again, there are only so many votes that get through the phone lines. Ten votes from a single person are as effective as single votes from ten individual people, because the ability to vote is scarce.

So it makes perfect sense to look on American Idol as another reason pure democracy is stupid, but it still makes no sense to repeatedly call someone a "socialist" not just when he clearly is not, but when you later concede, and readily, that he isn't.

Yeah, I ripped you with that Enron analogy. But that is what I do, remember "captious" - my name is its own disclamer. If you had said 2+2=4, but had shoddy reasoning I would have pointed that out as well.

He "ripped" me by effectively saying, "I'm right, you're wrong, and I don't have to say why." No rebuttal at all.

There were several ways you could have responded to me: ignore my comment, delete my comment, laugh it off, or engage in further argument. And I am quite disappointed in the tack you chose. Your last comment didn't need the invective-ridden first two paragraphs to make its point. I have some pretty thick skin so that doesn't bother me at all. For years I stood in a trading pit all day, fighting with the biggest scumbags around.

I responded in kind to someone who started polluting my blog with inanity. If he doesn't like it, I really don't give a damn. And if a trading pit is all he's been through, I'm not impressed.

As I said in my first comment, I am a fan of yours. But quite frankly, you overreacted. I guess you thought my comments were making you look bad or something. They weren't - at least not nearly in the degree that you discerned.

However, your response, replete with profanity, a toothless threat, and the closing of comments, doesn't behoove you one bit.

Once again, I really don't give a damn. I don't blog to get fans. Other than the occasional entertainment post (like Star Trek), I blog to provide what I think the truth is, however "rough" it can occasionally be. I don't even care if people agree with me, only that my writing makes them think, and that if they respond in comments or e-mail, that they also think and not resort to ridiculous usage of political terminology.

If I didn't care what you thought, I would neither read your blog, comment on it, or spend my time with this clarifying email.

If you still think I am crazy, then I would encourage you to have some of your friends/family read your original post and our dialogue (including of course this email) and render their opinions.

Conservatives in need of an appointment with reality

I've been meaning to blog about this, but as I've indicated, my time has become more and more limited. Illegal immigrants have hardly done themselves a service with the rallies a few weeks ago, particularly with ridiculous claims like the U.S. is their land. However, they have company: conservatives are joining them in going off the deep end. I will criticize conservatives as readily as liberals, and so this is part one of a continuing series.

Mark Levin on his WABC radio show last Wednesday had another of his usual vitriolic nights. He accused illegal immigrants of taking jobs away from Americans, proving that, like Rich Lowry, conservatives need to shut up about economics and stick to pure politics. Levin's stupidest articulation was that illegal immigration labor is "redistribution of wealth." Wait a minute, who's redistributing? Certainly not immigrants, legal or otherwise. If I hire someone who will do a job for $5, instead of another who wants $10, that's not redistribution in the slightest sense. That's merely competition. There's no more "redistribution" than there is from Toyota to General Motors.

If anyone is redistributing, it's Levin and his new socialist bedfellows, namely the labor unions that Levin praised for being pro-American. That's a lot of crap, frankly. Like all other protectionist groups, labor unions don't give a damn about their country, only themselves. "Patriotism" is a nice disguise, though, for their desire to use government to force me to hire them, and at a higher wage than their competitors would offer. And now even a conservative like Levin agrees with them.

As I've said before, the true underlying issue in illegal immigration is freedom, but not the kind that people think. It's not the freedom of other people to come to this country. It's my freedom to hire whomever I want, free from coercion by government and labor unions. How can we call ourselves a free country when I can't hire someone of my own choosing?

Now if Levin was referring to government programs that use tax dollars to provide services to illegal immigrants (like public schools and emergency room care), that's a different matter. I've long since called for the complete abolition of the welfare state, not just for illegal immigrants, but for everyone. That way no one will have to worry about paying for the education of illegal immigrants' children, or their health care via emergency rooms. Likewise, no one will have to worry about paying for his neighbors either.

Levin kept repeating the phrase "the rule of law," but his usage does not fit its true meaning. He used it to mean that the law must be enforced, but "the rule of law" means no such thing. Levin is a lawyer and ought to know better. "The rule of law" means that the law is applied equally to everyone, as opposed to "the rule of men" where laws are applied arbitrarily. That's it. "The rule of law" does not require that a law must be enforced regardless, because cannot a law be a bad one, and hence need to be abolished straightaway? As Don Boudreaux so well put it:

Just because words are written on paper and subjected to hocus-pocus beneath a soaring marble dome does not mean that these words are truly "law," or even that the government officials who wrote and voted for them want them to be taken literally.

Like other conservatives, Levin appeals first to authority, not freedom. Yet he isn't calling for a universal application of the laws on the books. All he wants is that laws he likes are enforced, and laws he dislikes aren't. As a conservative, he'd oppose laws permitting gay marriage or abortion. And what if U.S. immigration law were changed to make it easy for people to enter? Would Levin be so gung-ho about enforcing the laws on the books?

I have believed in border security, by which I mean the regulation of people entering the United States, as a post-9/11 necessity. That is not mutually exclusive, though, with the entry of immigrants who merely want to work. Contrary to Levin's claims, there's simply no correlation between honest immigrants and the problems of terrorism and other crimes that do admittedly come from illegal border crossing. I've said before that if we issued ID cards and allowed people to come in who wanted to work, we can deal with the criminals and terrorists who'll still cross in the desert.

What of conservatives' new claim that 200 million people across the world want to come here? It is true on its face, but not in the way conservatives imply. Hundreds of millions do want to come here, but that doesn't mean they can. Even so, think of how rapidly the American economy would expand. Think of all the low-grade jobs that Americans would no longer have to do. Instead of mopping floors and digging ditches, they can design aircraft, develop software or design high-tech machines. Or are Americans really so uncompetitive that they want to hold on to the low-end jobs, because they aren't any smarter than foreigners?

Monica Crowley had a similar invective this past Saturday afternoon on her own WABC radio show. One description she used was "a class of people who shouldn't even be here in the first place." Who shouldn't even be here? Just who is she, or anyone else, to tell one person that he can be free, but the guy standing next to him cannot? Should not all people have an equal opportunity to immigrate? That would be the rule of law, not some bureaucrat's arbitrary decision that we want more immigrants who are engineers instead of dishwashers. And if we're so worried that an immigrant will consume more in tax dollars than he'll pay in, we wouldn't have to worry about that once we abolished the welfare state.

In the 19th century, many Americans felt the same way about the Irish and Italians as they do today about Mexicans. John Gambling xenophobically ranted on his radio show some months ago, "Go home! You don't belong here!" Citizens, even those whose own families immigrated only a couple of generations before, have always had the unfortunate distrust of foreign cultures "invading" and "taking over." It is a shame that so Americans believe that, because they only deprive themselves of what other cultures have to offer.

For a long time I defended conservatives against accusations of racism and xenophobia, but now I do think some really are racist. They're principally afraid of brown-skinned people who do back-breaking labor all day long for very little pay, scrimp and save every dollar, and live 10 to an apartment so they can support families back home. Conservatives are afraid of such people because they're willing to compete, and because they're so different from typical American culture.

Lately I have wondered just what is this "American culture" that Americans want to preserve. For example, one of my co-workers is originally from Missouri and lived in Oregon for a couple of years. She doesn't fit any cultural patterns that I can think of. What about the differences between various Caucasian ethnicities in San Francisco and New York? NASCAR fans in the south versus Yankees fans in the Bronx?

There is the problem that many immigrants really do refuse to learn English, but the fault lies with government that mollycoddles them. Government publications (like the White House website) in other languages only creates a moral hazard. Some immigrants have taken the oath of citizenship, as a news article once put it, "in their own languages" rather than English. This claptrap does no more than encourage illegal immigrants to forego learning English, thus depriving them of an improving future. Like it or not, English is the unifying language of the United States, and indeed much of the world.

Now there is also the very big problem with immigrant movements that seek to "reconquer" the Southwest. But so long as government does not steal from my paycheck, and as long as the Constitution is still in force throughout United States jurisdictions, it would not matter to me if Los Angeles became 100% Hispanic, no more than it matters to me that Harlem is predominantly black. It does not affect me while my rights to life, liberty and property (including the right not to have government coerce taxes from me) are intact.

WASHINGTON — The House of Representatives is not lifting a quarter-century congressional ban on offshore oil drilling in coastal waters outside the western Gulf of Mexico amid arguments that new supplies are needed to lower energy prices.

A proposal to end the long-standing moratorium as it applies only to pumping natural gas was expected to be voted on later Thursday as lawmakers moved toward late-night approval of a $25.9 billion Interior Department spending bill.

The proposal to allow oil drilling in waters off both coasts and in the eastern Gulf of Mexico — areas off limits to energy companies since 1981 — was rejected by a 279-141 vote. It had been offered by Rep. Ted Poe, a Texas Republican, who called the drilling ban "an outdated policy" when the country needs to reduce its dependence on energy imports.

Separately, the House passed by a 252-165 vote a measure that would bar oil companies who fail to renegotiate contacts that allow for federal royalty relief no matter how much oil costs in the marketplace from future oil or gas leases.

The measure was aimed at correcting a mistake made by the Interior Department in the 1990s that failed to put an oil price cutoff for royalty relief. The mistake could cost the Interior Department as much as $7 billion in lost royalty revenues. While the measure does not order these contracts renegotiated, it would put pressure on companies to do so, its supporters said.

"Energy companies have been taking oil and gas from the American people for free and then selling it back to them at record prices," said Rep. Maurice Hinchey, a Democrat who sponsored the amendment.

Supporters of the drilling ban, renewed by Congress each year since 1981, scrambled to try to restore the natural gas drilling ban which had been stripped from the Interior spending bill in committee.

Republican Rep. John Peterson argued that developing the offshore gas resources would pose none of the environmental risks — mainly the prospects of a spill — associated with oil drilling. Supporters of the ban argued that natural gas and oil drilling were too closely linked.

Lifting the moratorium for the first time in 25 years would allow energy development within three miles of shore along coastal areas "where tens of millions of our citizens have made it clear that they don't want any more drilling," said Rep. Lois Capps of California, which has extensive offshore deposits but strict bans on exploitation.

Capps planned to offer an amendment to continue the natural gas drilling prohibition.

Florida lawmakers — both Democrats and Republicans — said energy development off the state would threaten a multibillion dollar tourist industry. Florida depends on tourism "and we're going to protect it," vowed Rep. Alcee Hastings, a Florida Democrat.

Opponents of the drilling prohibition argued that access to offshore oil — and especially natural gas — would drive down energy prices and help reduce the country's dependence on foreign sources of energy.

"We have lost millions of jobs already because of high energy costs, and we're going to lose millions more," said Peterson, who has tried unsuccessfully for two years to lift the offshore moratorium as it applies to developing natural gas.

Soaring natural gas prices, which have quadrupled since 1999, have forced companies — especially in the chemical and fertilizer industries — to consider moving overseas where fuel prices are much cheaper, he said.

Peterson's measure would lift the congressional ban which prohibits the Interior Department from offering gas leases in waters along both coasts and in the eastern Gulf of Mexico. It would not affect a presidential ban on drilling, issued by executive order, that is in effect until 2012.

Drilling proponents also faced an uphill struggle to get the moratorium lifted in the Senate, where senators from coastal states probably could block any such action.

President George W. Bush has said he has no plans to remove the drilling ban.

But Capps said if Congress lifts its moratorium and declares that coastal waters should be opened to drilling, she fears the president "is going to revoke his moratoria" as well.

Lawmakers from coastal states —both Republicans and Democrats — worried that drilling offshore could threaten their tourist and fishing industries and bring risks of environmental damage.

"People don't go to visit the coasts of Florida or the coast of California to watch oil wells," said Rep. Sam Farr, another California Democrat.

Don't you just love Congressional politics? Nothing is ever passed anymore as a separate bill. And the most pernicious measures inserted into massive bills tend to be simple, yet so effective in damning the American people.

Whether in ANWR or off-shore fields, merely allowing drilling will help drive down oil prices immediately. Capps needs to take a microeconomics class or two. Prices are not just a reflection of the present, but of expectations of future supplies too. When buyers on the global petroleum market are uncertain of Iranian and Nigerian output, and when they expect China and India's appetite for oil to grow, they're willing to pay more. When they know that the supply, especially domestic supply under stable U.S. control, will be higher for years to come, they won't be as willing to pay. As I've explained before, we won't see $40 per barrel crude right away, but buyers will have greater confidence in reliable supplies.

Back into the limelight steps Maurice Hinchey, the conspiracy theory nutcase who claimed on Sean Hannity's radio show that Karl Rove leaked the "Bush memos" to CBS. (After a year and some months, he has yet to offer one shred of proof.) In accusing the oil companies of making too much profit, Hinchey ignores the reality that our friend Josh Hendrickson pointed out last month: other industries normally have far higher profit margins. And I ask, who was crying for the oil companies during the 1990s when oil and gasoline prices were quite cheap?

Hinchey's crime is even worse: is he really as stupid as he sounds, that he laments the federal government losing $7 billion in royalties, when the oil companies would invariably pass that cost on to consumers? He also omits the fact that states and the federal government collect far more in gasoline taxes than oil companies make in profit. I wish I could remember now who recently noted that with all the taxes collected over the years, the federal government could buy every American today a brand-new Prius. How's that for putting things in perspective? And don't forget the double-taxation, because governments also get a cut of oil companies' profits.

Certain lawmakers are so concerned about tourism, but higher oil prices (at the pump and also the rippling effect) cost Americans far more than the tourism industry would gain. "Protect" is the proper word, all right, because Hastings and Farr are engaging in nothing short of protectionism. "To hell with you, and to hell with the idea that I should have to compete. I'm going to use the power of government to benefit my livelihood and make you bear the cost."

Did they ever consider who can still visit Florida or coastal California when high gasoline prices force families to cut back on leisure? What of families taking vacations closer to home, because it now costs considerably more to drive somewhere, or because airline tickets have gone up from higher fuel costs? And what of the working poor, who Democrats supposedly champion? Instead of actually doing something to bring down the price of gasoline, all the Democrats are doing is protecting the vistas, which are enjoyed more by the well-to-do. Just who are liberals really fighting for?

And three miles is really quite a distance. To put something else in perspective, I work about a mile north of the Empire State Building. At triple that distance, even the largest oil rig will hardly mar the sea's horizon. I personally would prefer the oil rigs out there, knowing that someone's helping to keep my fuel costs down (and strictly for his own self-interest).

Humberto Fontova recently noted in Human Events that there tends to be more aquatic life, especially fish, around the artificial reefs of oil rigs. His excellent piece addresses the issue of oil rigs' environmental impact. "The environmental dangers of oil exploration and extraction rank right up with the marvels of Cuba's healthcare as modern man's most zealously cherished fables." In 50 years, we've never had a major spill from rigs, only tankers, and "More birds get fried by landing on power lines and smashed to pulp against picture windows in one week than perished from three decades of oil spills." It's well worth reading the whole thing.

Thursday, May 18, 2006

American Idol Farce

As some of you have noticed, my blogging has been getting lighter. I've had a lot going on in real life, and I recently got a "promotion" of sorts at work. I now have a few more responsibilities, a not insignificant pay increase, and still more training ahead of me. I wasn't able to blog since Sunday night because I've had a couple of all-day training sessions, and those require that I get a more normal amount of sleep (i.e. more than my usual four hours a night with a 30-minute refresher nap on the Metro-North ride into the city).

After last week's travesty, I kept my vow not to watch American Idol ever again. Technorati seemed on fire with a million bloggers also saying they were never watch the show again, that Chris getting voted off was ridiculous, etc. One of my co-workers, a formerly huge fan of the show, said he too was giving up on it.

I will admit that I would have made an exception had the finale come down to Taylor and Elliot. Yeah. Taylor and Elliot. Could someone tell me what rational universe I think I'm living in?

Tonight at 10:03 Eastern, I started checking for American Idol results. SHEESH! Then I called one of my oldest and best friends to talk about the results, but the show had just begun in Steve's time zone. I find it more than strange that the show wasn't being broadcast live in the Mountain Time Zone, or at least Utah. Steve was just as disappointed as I was to see Katherine survive another week.

If it already hadn't, AI "jumped the shark" when Chris Daughtry got voted off. That was just...unforgivable. At that point, it was evident that the show has become a farce, pure and simple. Tonight was nothing more than reinforcement.

My co-worker wanted Taylor gone weeks ago, but ever since I started watching (Rod Stewart), I've really enjoyed Taylor for his versatility, style and sheer fun value. I think any two out of Taylor, Chris, Elliot and Paris deserved to make it to the end. Katharine? No way. For heaven's sake, she forgot the words two weeks in a row! But it's even worse. As I said last week, she screeches through every song to make her range appear greater than it really is. She has no excuse for that too-frequent guttural tonal quality, particularly since her mother is a vocal coach. If those notes were in her real range, she'd be hitting them with purity and clarity.

Linda Stasi of the New York Post had a simple plea on Monday: "PLEASE, NOT MCPHEE." And I think she's right. Elliot was guilty of this a time or two, but Katherine couldn't stop staring into the current camera. Paris, Chris and Taylor, by contrast, just got out there and sang.

Conservative columnist John Podhoretz had a superb editorial in New York Post last Friday. He discussed why Chris got voted off, which after skimming I initially deemed pointless and a waste of his talents. Then I read it again and realized how insightful Podhoretz is. It has everything to do with American voting patterns, and I'll wager that the man understands the political economy of voting better than most poli sci professors. However, Podhoretz was sadly incorrect to predict Elliot would win in the end.

His piece attracted a bit of criticism from readers. One blamed Chris' lack of support on home viewers' laziness, but that would have had to affect more of his supporters than the others. There's no evidence supporting that; Podhoretz's explanation of appeal is more credible. Another letter said, "It's all a bunch of nonsense and not worth writing about by a person of Podhoretz's level of intellect." That's what I thought at first, but Podhoretz gave us an important political lesson. Sometimes Americans can't understand how things work until they're put in more familiar terms.

One reader wrote that Podhoretz's "major flaw" was ignoring that one reader can vote multiple times. "In the political arena, it's one man, one vote." First, is she really naïve enough to believe that? Maybe, since she's from Houston, not Chicago. Second, the phone lines are busy enough that even if someone were capable of voting 100 times (a more realistic number), he'd have tied up the lines and deprived 99 others of voting for the same person. In other words, because there is a practical maximum number of votes, the end result would be the same. Multiple text messages could definitely "stuff the ballot box," but so few people would resort to that.

Another letter said that Chris "looked as if he was either staring off into space or reading cue cards," which "turned off his fan base - a sure way to lose any election." I disagree. From the start, I thought Chris has a real rock star presence on stage, especially in the way he grips his microphone and then goes down to work the audience. I think Chris has a long and great career in front of him, and I was so happy to hear that he'll be Fuel's new lead singer. I'm not really into grunge, but I will definitel buy that album. Chris deserves no less than the album going platinum on the first day.

The final letter that was printed accused the show of being "fixed": "I firmly believe the executives on the show were determined that three male finalists would be bad for mass-market ratings." Point well taken.

Monday, May 15, 2006

It's even worse than we thought

The real source of the banks' frailty is political patronage, writes Minxin Pei

May 09, 2006

ESTIMATES of the growing pile of non-performing loans (NPLs) in China appear to have caught many by surprise, especially because Beijing's efforts to clean up its rickety state-owned banks were thought to have greatly reduced NPLs and the risk of a full-blown financial crisis.

According to Ernst & Young, the accounting firm, bad loans in the Chinese financial system have reached a staggering $US911 billion ($1.18 trillion), including $US225 billion in potential future NPLs in the four largest state-owned banks.

This equals 40 per cent of gross domestic product and China has already spent the equivalent of 25-30 per cent of GDP in previous bank bail-outs.

The revelation shows that half-hearted reforms have addressed merely the symptoms of China's financial fragility. Poor business practices are blamed for NPLs but the real source is political. As long as the communist party relies on state-controlled banks to maintain an unreformed core of a command economy, Chinese banks will make more bad loans.

Systemic economic waste, bank lending practices, political patronage and the survival of a one-party state are inseparably intertwined in China. The party can no longer secure the loyalty of its 70 million members through ideological indoctrination; instead, it uses material perks and careers in government and state-owned enterprises (SOEs). That is why, after nearly 30 years of economic reform, the state still owns 56 per cent of the fixed capital stock. The unreformed core of the economy is the base of political patronage.

Once upon a time, I was a China-basher who lamented its strong competition and "unfair currency practices," calling it an "export juggernaut." China's economy is booming, but I've since learned that it's nothing to fear, let alone envy. "The grass is always greener on the other side," until we realize our neighbor's increasing income is out of necessity, and not because he's moving up by working more efficiently and earning promotions. He's working two jobs to replace the family's squandered savings, and to sustain its continued spendthrift practices.

Two years ago, when completing my undergraduate thesis on the U.S. current account deficit, China's non-performing loans were estimated at $180 to $200 billion. The more China prospers, the more money its corrupt officials can waste.

China's own internal chaos is why it invests so much in U.S. Treasury bonds. They're an extremely desirable form of savings, making them excellent collateral for China's insolvent financial infrastructure. Stephen Roach, Morgan Stanley's chief economist, has said we ought to thank the Chinese for funding much of our recent budget deficits. He is correct to note that much of the money comes from China, but he doesn't mention that the money originated with Americans. Also, he says that China is "plugging a hole in the American economy," but he doesn't acknowledge that China helps encourage the digging.

There is a key difference between U.S. debt today and U.S. debt in the 1980s and most of the 1990s. (Here I'm including Social Security revenues, which help reduce the actual budget deficit, because we're looking purely at how much money the federal government must borrow in addition to total revenues.) Remember that money is the ultimate fungible commodity, so ultimately it doesn't matter if I, Bill Gates and Junichiro Koizumi each invest $1 into Microsoft, Google and U.S. Treasury bonds, or if we each select one company and invest $3. Whether foreigners put money into U.S. Treasury bonds or other American assets, there was enough from everybody to satisfy federal borrowing. Now, since 1997, the current account deficit has consistently exceeded the federal budget deficit. That means that any money since 1997 that foreigners invest in U.S. Treasury bonds is effectively money they earned from exporting to us. This means the Federal Reserve won't have to worry about interest rates going up because of government borrowing, and it won't have to print money specifically so it can buy Treasury bonds and thereby fund federal budget deficits (which is very inflationary). The Fed, however, will still buy bonds as necessary to influence interest rates.

There's no historical correlation between federal budget deficits and the current account deficit. It appears correlated in recent years, but in fact, the current account deficit started surging in 1998 when the federal budget deficit was decreasing. As I said, China helped encourage the digging. When it started purchasing more and more U.S. Treasury bonds, when it started competing for bonds, using dollars it earned from exports to the U.S., China helped suppress interest rates (initially for Treasury bonds, then other bonds too). This meant that Americans who'd have otherwise invested in bonds shifted to investment assets not dependent on interest rates, or they used the money for consumption spending. So the current account deficit didn't start because Americans one day decided to spend more, or even because they realized someone else will lend the money. Their decision was all based on interest rates, like Treasury bonds and savings accounts. Roach forgot that in a free market, if domestic businesses aren't getting enough domestic investment, and foreigners cannot supply the capital, then domestic businesses will offer higher and higher interest rates until they attract enough money.

Still, we should indeed thank the Chinese. They get what they need, the world's safest bond to shore up their banking system. We get to double a small portion of our national income for around 5% interest, which we likely will be able to afford to pay in the future, and by definition for less than how we benefit today.

Sunday, May 14, 2006

Who says they're not accountable?

DUNCAN, Okla. May 14, 2006 (AP)— Halliburton earned a record $2.4 billion last year, but Houston executives will forgo Texas-sized luxury when they come to this rural Oklahoma county seat this week.

Shareholders, who have gathered for the company's annual meeting since 2003 at Houston's lavish Four Seasons Hotel, will meet Wednesday in the modern, but far humbler setting of Duncan's convention center. Those staying the night can choose the Holiday Inn, with rooms opening onto the parking lot, and the Chisholm Suites Hotel, which takes its name for the cattle trail that once passed here.

Halliburton Co. says it moved its meeting to this company town of 22,500 to honor its southern Oklahoma roots. The company's critics accuse it of running to a prairie outpost to hide.

"They're relocating to a city where they don't actually have to be accountable to their own shareholders," said Maureen Haver, spokeswoman for the Houston Global Awareness Collective and one of 15 protesters arrested at Halliburton's meeting last year. "They're going to a town they have in their pocket." ...

Joseph Horgan, a representative for the International Brotherhood of Teamsters, came to Tulsa to represent the union's concerns and ended up riding out a tornado warning in a parking garage. Days later, he followed Pfizer to Lincoln.

Both meetings, he said, were convened far from concentrations of active shareholders, limiting participation by those with beefs about high executive pay and other business practices.

"They were trying to escape scrutiny by active owners," he complained after the IBM meeting.

IBM and Pfizer say changing their meeting locations is nothing new and that doing so gives shareholders in different regions of the country the chance to show up and executives the chance to showcase local facilities. Both reported average meeting attendance.

Liberals can never stop whining about successful American companies based on raw capitalism, and they'll seize on any excuse, no matter how ludicrous.

The "critics" act as if they're acting in the shareholders' interests, but the shareholders are more than capable of defending themselves. If the shareholders don't like where the meetings are being held, they can flex some muscle with their votes. Shareholders tend to keep a company's managers in line simply because the shareholders are the owners, and as owners they are in control -- not the other way around.

Last year, former Morgan Stanley executives started contacting institutional investors about pressuring then-CEO Phil Purcell to resign. Purcell was losing support because, among other reasons, he replaced the president with two friends, refused to spin off the Discover Card, and didn't appear sufficiently "in control" that investors would regain confidence and stop the company's stock price from falling. These shareholders were a significant percentage but still a minority (about a third of the total votes as I recall), yet enough that Purcell resigned. So who thinks that Morgan Stanley, which is far larger than Halliburton, wasn't accountable to its shareholders? When former executive John Mack was lured back to be the new CEO, he was offered a very generous compensation package, yet enough shareholders didn't mind. After all, what's $20 million a year when the company's profits could rebound?

The relatively low cost and ease of travel, compared to past decades, actually has made company managers more accountable. Yet even when meetings are held in major cities, it's not worth most shareholders' time to attend. But again, technology increases a company's accountability to its owners, and far more effectively than any amount of government regulation. Companies can record video and send DVDs to shareholders, set up massive conference calls and video feeds, and e-mail transcripts as soon as they're completed.

The more probable reason for the locations are so these companies can actually get something done at the meetings, instead of dealing with liberal morons who like nothing better than to demonstrate violently and trespass. A sit-in in a hotel is a violation of private property, not freedom of speech.

PARIS May 13, 2006 (AP)— President Jacques Chirac started 2006 by declaring his determination to make it "a useful year for France." Instead, his government has lurched from crisis to crisis.

Riots, protests and, now, sordid revelations in an alleged dirty tricks campaign sullying the top echelons of power are all but ruining chances for meaningful reform, and risk dooming Chirac's governing right ahead of next year's elections for president and parliament.

Happy 2006, Jacque.

Chirac and his government's last major surrender was only last month. After students rioted throughout France over a proposed labor law, he went on to sign what was originally a very sensible reform in French labor law. However, he didn't do so despite the protests. Actually, he did it only in response, as he signed it and immediately asked that it not be enforced. Nine days later, it was replaced by a mockery of the original. It expanded state powers instead of reducing them, and worst of all, it capitulated to the students and their "poor me!" demands. The new law failed to include the needed reform allowing French companies to fire young employees who weren't working out.

Thursday, May 11, 2006

Fleecing the taxpayers, $10 million at a time

WASHINGTON May 10, 2006 (AP)— Scientists, inventors and entrepreneurs will be able to vie for a grand prize of $10 million, and smaller prizes reaching millions of dollars, under House-passed legislation to encourage research into hydrogen as an alternative fuel.

Legislation creating the "H-Prize," modeled after the privately funded Ansari X Prize that resulted last year in the first privately developed manned rocket to reach space twice, passed the House Wednesday on a 416-6 vote. A companion bill is to be introduced in the Senate this week.

"This is an opportunity for a triple play," said bill sponsor Rep. Bob Inglis, R-S.C., citing benefits to national security from reduced dependence on foreign oil, cleaner air from burning pollution-free hydrogen and new jobs. "If we can reinvent the car, imagine the jobs we can create."

"Perhaps the greatest role that the H-Prize may serve is in spurring the imagination of our most valuable resource, our youth," said co-sponsor Rep. Dan Lipinski, D-Ill.

The measure would award four prizes of up to $1 million every other year for technological advances in hydrogen production, storage, distribution and utilization. One prize of up to $4 million would be awarded every second year for the creation of a working hydrogen vehicle prototype.

The grand prize, to be awarded within the next 10 years, would go for breakthrough technology.

[Inglis] said the prize would not take away funds from any federal hydrogen programs, including the $1.7 billion hydrogen research program that President Bush first detailed in 2003.

It won't just be these millions that government takes from the rest of us to give to a few scientists. What can we bet that a lot of the projects will be funded by government grants? Naturally, this money is on top of the $1.7 billion that President Bush decided to throw at hydrogen research. Every time government subsidizes a particular type of research, whether hydrogen and fuel cells for automobiles, or ethanol, we should reflexively ask: what's so unproven and uncertain about it that the private sector won't fund the research, leaving it to government funding it by force? (If you don't think it's done by force, just try holding back your share the next time you file your taxes.)

Inglis talks about creating jobs by reinvention when he should instead study Bastiat's "What Is Seen and What Is Not Seen" essay. The prizes are merely money taken from some and given to others, so any created jobs come at the expense of other jobs destroyed elsewhere. The redistribution is still both morally and economically wrong, whether it stems from special interest lobbying or politicians' desire to appear benevolent and pro-science by doling out well-publicized rewards.

Besides, it's not the concern of government bureaucrats that any submitted projects make it to production in the real world, only that they choose something "creative" for the winning designs. The free market already has the capability of encouraging truly "breakthrough technology" and rewarding its creators: profit. If your new design is innovative but still impractical because it will be prohibitively expensive, then it won't succeed. If you design something new that enough people will want and can afford, the encouragement of a government prize is unnecessary; in fact, it won't compare to the rewards offered by the private sector. Particularly if you develop major automotive technology, you won't be worrying about a paltry $10 million prize.

Wednesday, May 10, 2006

American Idol: I'm really pissed off

Until a few weeks ago, the only "American Idol" I ever saw was the finale between Reuben Stoddard and Clay Aiken. I was visiting my best friend in California at the time, and I thought I'd see what the hubbub was about. I started watching this season because Rod Stewart was going to coach them on songs from his "Great American Songbook" albums, which I love. I wasn't sure that it was Ace's time to go, but his performance that night was indeed mediocre.

Kelly has a good country voice, but it was too thin for "Unchained Melody" -- or, frankly, any other song requiring rich vocals.

I didn't know the Prince or Mary J. Blige songs that Paris sang, so I can't judge her there, but I was so saddened to see her go. I thought she had the best voice of the last several contestants.

My favorite is Taylor simply because he's fun to watch. His "Jailhouse Rock" was a hoot to watch; I don't think it was "karaoke" like Simon and one of my co-workers think. "In the Ghetto" was very well done, showing he doesn't need to dance to do a good performance. Chris was fantastic on both of his songs, especially the second one. I wasn't familiar with it, but something told me that it properly starts slowly and picks up at the end. My highest compliments, Chris, for staying faithful to the King's rendition. Elliot likewise was fantastic, and I agree, better than I had heard him before. He and Chris were the two best of the night. Between Taylor and Katherine, I would have kept Taylor.

So, tonight really me pissed off. Chris is gone?! I still can't believe it. Are people really that stupid? Katherine should have been tossed after her last several performances, which were consistently poor (last night's were nothing short of awful). She has a good voice and can sing well if she sticks to her limitations. Her range and vocal power are not as great as they appear, otherwise she wouldn't have to screech through every song. My dad was a vocal purist and taught me to be the same, so every time she can't sing a note with a pure tone and shrieks to hide that fact, I practically get a headache. What particularly grates me is when she tries to put her own style into songs, which just doesn't work, particularly when she can't hold a note and must warble to disguise it. But I guess she's getting a lot of the male hormone vote. Sheesh.

I'm done with the show. I won't ever watch it again on my own initiative. This season has turned out to be a farce.

A lesson for Warren Buffett on international investment

Berkshire Hathaway recently announced that it's buying an 80% stake in Iscar Metalworking. An Israeli newspaper quoted him as saying, "I plan further acquisitions of Israeli companies in the future." Buffett also said, "There are dozens of countries in which we would be happy to buy the right business."

Side note: see what happens when a country strives for a free market? It will attract investment capital from all over the world, leading to prosperity and encouraging even more freedom. Are you listening, Hugo Chavez and Evo Morales, you tyrants who are leading your countries down the path of economic destruction? Manuel Obrador won't listen, and he might just win Mexico's presidential election. Obrador opposes foreign investment, though Pemex (Mexico's nationalized oil company) cannot survive with foreign capital. Apparently Obrador would prefer that Mexico stay poor if achieving prosperity means those evil foreign capitalists also profit.

This international transaction ought to show Buffett the error of his ways, but it's likely he will still believe that the U.S. should force zero trade deficits, restricting imports so they don't exceed exports. However, trade gaps are, by definition, balanced by foreigners' investments in the country running the trade deficit. Foreigners have to do something with the money they earn from selling goods and services, so they buy assets in that country. But it doesn't even matter that it's the same foreigners buying assets, which might surprise people that have the false idea that trade deficits are inherently bad.

Israel is running a trade deficit, which is actually typical of growing economies today, and Buffett is helping to balance it by acquiring Israeli assets. It wouldn't matter if Buffett were involved in 0% or 100% of all exports to Israel. Buffett would eventually do business with someone who would eventually do business with someone who exports goods and services to Israel. The money might get converted from shekels to euros to pounds sterling to dollars, and then Buffett would convert them back to shekels. It all balances out in the end.

Another example: I spend money at my local supermarket, which buys nothing from me. I'm not going to worry about that, or that none of the employees together do an equivalent amount of business directly with me. Their own spending will spread throughout the economy (the global economy if need be), and everything will balance out in the end. One might invest $100 that week via my employer's brokerage arm, but only a very, very small fraction of the fees will help pay my salary. Or he'll invest $100 through another firm, with similar fractions spreading throughout. So how do I eventually get back the money I spent on groceries? The flows are too complex to spend time on, really, and it doesn't matter anyway: money is the ultimate fungible commodity. Some people track the travel of dollar bills as a curiosity, but it's obvious that one bill is as green as the other. A penny here, a penny there, and it eventually adds up. So just like I don't worry about the precise source of each paycheck, I don't worry about the precise source of foreign investment to balance out a trade deficit. Actually, I don't worry about trade deficits at all.

A trade deficit is neither good or bad, only an indication that domestic consumers would rather spend their money while foreigners supply capital. There's no danger of foreigners buying up an entire country, Don Boudreaux just explained, because as an economy grows, new assets are created that foreigners can buy. Foreigners' particular preferences even directs the creation of new assets just like domestic consumers' desires would. One example I have emphasized is real estate, especially in New York City. Some foreigners contract to buy luxury apartments even before construction has begun on the high-rises, because they need to do something, after all, with the money they earn from selling their goods and services to Americans. The dollars eventually come home.

Tuesday, May 09, 2006

The environment or lives?

May 8, 2006 — DAR ES SALAAM (Reuters) - Tanzania is lifting a 2004 ban on the pesticide DDT so it can be used to fight mosquitoes carrying malaria in the east African nation.

Tanzania had signed up to an international treaty — known as the Stockholm Convention — which seeks to outlaw the use of dangerous industrial chemicals dubbed the "dirty dozen" and blamed for deaths, cancer or birth defects.

DDT, while covered by the convention, is exempted when used for disease control.

Health Minister David Mwakyusa said Tanzania was reversing the prohibition because malaria, which is one of Africa's biggest killers, was claiming so many lives.

"We have been forced to reconsider the use of the DDT to try to save the lives of our people," he said at the weekend.

A malaria expert in Dar es Salaam, who asked not to be named, expressed concern at the decision to re-introduce DDT.

"This should not have been rushed...we need to look into the pro and cons very closely," he told Reuters.

"DDT is one of the scientific inventions that has caused health and environmental havoc."

Good for them. The people of Tanzania would prefer to live and take their chances with DDT, rather than risk suffering and often dying from malaria. You can bet that the "malaria expert" is wealthy enough that he need not worry about mosquitoes, or if he does fall ill, he can afford medicine.

Health officials frequently ask for more Western aid so they can set up mosquito nets to put around beds, but those are relatively costly, take time to distribute, and do not protect people as they go about their day. The various medicines used to treat malaria are even more expensive. DDT, on the other hand, is a highly cost-effective and preventative. However, as Thomas Sowell explained,

The whole environmental extremist movement is based on doing Good Things, in utter disregard of costs or diminishing returns.

The idea that DDT might leave residues with harmful effects on the eggs of some birds was enough to set off a worldwide environmental crusade to ban the use of that insecticide. The resurgence of malaria after that ban has cost millions of human lives.

Monday, May 08, 2006

The intellectual bankruptcy of the left, part II

This post could also be titled, "Brad DeLong and the art of the stupidly flawed analogy."

Ever since Don Luskin started catching Brad DeLong in serious intellectual property violations (which I understand got DeLong in a wee bit of hot water with the University of California Regents), DeLong has tried to get back at Don any way he can. In fact, I recently discovered that he even smeared Don and me together. A supposedly intelligent Berkeley economics professor (though some consider the last four words together an oxymoron) evidently couldn't understand what Don and I were talking about. Well, that's what DeLong gets for acting like the rude schmuck you tend to encounter at cocktail parties, the kind who uninvitedly jumps into the middle of your conversation.

It's too bad DeLong's "intellectual garbage pickup" is more a revelation about his own inadequacies and hypocrisy. "And why beholdest thou the mote that is in thy brother's eye, but considerest not the beam that is in thine own eye? Or how wilt thou say to thy brother, Let me pull out the mote out of thine eye; and, behold, a beam is in thine own eye? Thou hypocrite, first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother's eye."(Matthew 7:3-5)

Let's take DeLong's entry a piece at a time. First, the federal government was not running budget surpluses of $200 billion per year. (Note his use of "running" to insinuate surpluses were the status quo under Clinton, when in fact deficits were falling just as much because of the Republican-controlled Congress.) The federal government has never had a $200 billion surplus, and telling that to American taxpayers is asking us to believe complete bullshit. Take a look at the Congressional Budget Office's own historical data, table 1. You might think the federal government had surpluses of $69.3 billion in 1998, $125.6 billion in 1999, $236.2 billion in 2000, and $128.2 billion in 2001. However, the federal government was not running surpluses that large, because the total revenues included Social Security taxes.

The Treasury by law is required to "borrow" Social Security surpluses, so those revenues are negated by the fact that we must pay them back in the future. The federal government actually had a $29.9 billion deficit in 1998, a mere $1.9 billion surplus in 1999, an $86.4 billion surplus in 2000, and a $32.4 billion deficit in 2001. It's just more hypocrisy from liberals because, back in the 1980s and early 1990s, Democrats liked to use Social Security taxes to mask how bad the budget deficits really were. Today they're suddenly deficit hawks, though you could bet they wouldn't make this criticism if John Kerry wrecked the budget and national economy with universal health care.

Second, what warped universe does DeLong think he exists in, that he maintains it's fair for two people to consume different resources (going to lunch) yet split the cost equally? The truly fair thing is to let each pay for himself. However, we are, after all, dealing with the socialist mindset. When DeLong then suggested that one should pay more than the other, as an avowed Marxist, what he's really saying is that it's fair not because that person consumes more, but because that person makes more money. That's quintessential modern liberalism for you: let everyone else create the wealth, and use the coercive power of government to take more than what you put in.

Third, DeLong's analogy is simply stupid for claiming that the wealthier of the two pays $5 out of a $20 tab, and the other guy goes into debt for $15. Let's even play his game and assume the ludicrous idea of borrowing $3 for every $1 spent. Now, how do we pay the interest on government bonds? With taxes. And who pays the bulk of taxes? "The rich." So why is it so hard for DeLong to connect points A and B, and realize that "the rich" will pay most of the borrowed money? The NCPA broke it down so well, using the IRS' own data: "The top 25 percent of income earners pay nearly 83 percent of the income tax burden, and the top 10 percent pay 65 percent. The top 1 percent of income earners pay almost 35 percent of all income taxes."

But let's put it in a Sesame Street-simple picture, complete with colors so that even a Berkeley economics professor can understand. Econopundit Steve Antler provided a couple of graphs a long time ago that showed effective tax rates for each tax quintile. You don't need to hold up a micrometer to your computer screen to see that each quintile got a very even tax cut. George W. Bush's tax cuts put more money into the pockets of the rich, yes, but also into everyone else's pockets. At the same time the tax burden shifted more toward the rich. The rich don't mind, however. Though they're paying more in taxes, their after-tax income is higher than before. The Laffer Curve rides again.

Fourth, DeLong's analogy is oversimplified and assumes the two diners are merely consumers. Have we walked blindly for the last 150 years, that we've forgotten Bastiat's clear lesson that "Man produces in order to consume. He is at once both producer and consumer"? Apparently DeLong never learned that. (Hint, Brad: less Keynes, less kissing Krugman's ass, and more Bastiat.) Once we realize what Bastiat was saying, we also realize that incentive is the key economic force that DeLong omits. That's a natural thing with Keynesians, though.

When the wealthier of the two diners realizes that he's picking up most (if not all) of the tab, whether he pays it now or pays the credit card later, he'll want to produce less. When the other diner realizes that he doesn't have to pay much (if anything), he won't want to produce much either. We could delve into tax rates and other parts of the real world, but those can't fit into DeLong's analogy either. I'm suddenly reminded of Krugman's laughable attempt to reduce an economy to a single equation. The two of them embody the joke about the physicist's chicken processing machine that assumes a spherical chicken.

Fifth, like any bad economist, DeLong deals with the absolute numbers, rather than the proper way of comparing the budget deficits against GDP:

Today we're running a deficit of $300-$400 billion a year. Relative to what would be a sane, reality-based, and appropriate fiscal policy, the Bushies are putting $500-$600 billion this year on our collective national credit card.

That bill will come due: somebody has to pay it. To pretend that it won't--to pretend that you can talk about the progressivity of the burden of paying for the federal government without talking about the long-run incidence of the national debt--well, that would be the equivalent of me telling Dariush that only cash matters: that when we talk about who paid for lunch, we should count only cash put down now, and we shouldn't count the fact that his credit card bill will show an extra $15 due next month.

At last, DeLong resorted to a strawman. We supply-siders simply don't pretend that no one will have to pay the debt. What we do say is that if the economy grows faster than the debt, it's fine. If I get a 5% raise, I can more than afford a 4% increase in my annual debt service payments. As far as the "long-run incidence" of who's paying off the debt, well, I already addressed that. Even if we pass the debt on to our children, they'll be wealthier than we are and even more capable of paying it off.

"You are not to inquire how your trade may be increased, nor how you are to become a great and powerful people, but how your liberties can be secured; for liberty ought to be the direct end of your government."
- Patrick Henry, 1788